In the seabed near by, a 300ft long canal had been dug, up to 30ft deep. Work was still being done on the structure by the Liberation Tigers of Tamil Eelam (LTTE) in the town of Irattavaikkal when encroaching government troops forced them to leave.
"It's not a vessel, it's only a structure, but someone could move inside there," said military spokesman, Brigadier Udaya Nanayakkara.
"We believe they may have intended to make use of this underwater," he added.
The potential hiding place is just one of many pieces of LTTE hardware and equipment that have been found in recent weeks as the rebels and their leader, Velupillai Prabhakaran, have been squeezed into an ever- diminishing patch of land.
Last month, the military claimed to have discovered several basic submarines that were being constructed by the rebels, possibly to be used to escape.